The POTUS gave his blessing to the deal “in concept” – one that is way off from what he promised would be ideal to ensure that TikTok is not a national security threat anymore.
The long-standing saga around TikTok’s future in the USA looks likely to end in the coming week as the China-owned superhit app is reported to have successfully hashed out a plan to stay on American Mobile App Stores. As part of the deal, Chinese owned ByteDance will sell 20% of a new entity called TikTok Global, which will be headquartered in the US, to retail giant Walmart and technology giant Oracle.
TikTok, which boasts 100 million monthly users in the US, has been a hot topic for White House officials. It has served a part of the recent diplomatic tensions between the US and China. White House officials and several security experts have been sceptics about the independence of ByteDance, TikTok’s parent, from the Xi Jinping-led Chinese government.
“I have given the deal my blessing. I approve the deal in concept.”US President Donald Trump on the TikTok deal with Walmart and Oracle
Interestingly, despite the deal on the horizon and President Trump’s nod, the issue of national security, which prompted the POTUS to threaten TikTok with a ban, still remains. But before elaborating on that, let’s take a look at how ByteDance’s deal with Walmart and Oracle is shaping up and how it impacts American TikTok users.
TikTok Global – A Walmart Extension powered by Oracle
As part of the deal where Oracle and Walmart will acquire 20% of TikTok Global, the data of American users will be hostel on Oracle’s cloud. In a statement, TikTok asserted that this arrangement satisfies the United States national security requirements. TikTok Global’s board will have 4 Americans out of 5 directors, including Walmart CEO Doug McMillon.
Oracle will be responsible for the data privacy of the users, as well as the systems running TikTok. The tech giant, which lags behind Microsoft, Google and Amazon in the cloud computing market is expected to tremendously benefit through the opportunity.
Similarly, Walmart’s plans for TikTok don’t stop at investment and shareholding. The global retail giant recently revealed plans to set up e-commerce capabilities on TikTok to enable users to directly become customers of Walmart’s online stores. TikTok’s userbase, which is mostly made up of millennials will aid Walmart with newfound consumer-base for fashion and fast-moving products in comparison to global rival Amazon.
But while Oracle and Walmart are already formulating plans for TikTok’s future in the USA, the security issue and probability of a backdoor access for Beijing to US users’ data still remains.
Why the deal doesn’t dispel concerns around threat to national security
Months ago, voices in the White House and Capitol Hill in Washington voiced concerns that due to the perceived control that the Xi Jinping government exercises on Chinese tech companies like ByteDance, data of American users collected by apps like TikTok and WeChat could be used for disinformation and blackmail campaigns by Chinese state actors. This made Trump come out and threaten to oust TikTok from the US, gradually moving on to demand a change of ownership to American companies. In fact, before blessing the deal, the President had said that he “doesn’t like” what he has heard of the TikTok deal, just days ago.
Watch: Trump says he doesn’t like what he’s heard of TikTok deal
Now, while the reported deal is being considered satisfactory by the White House, security experts are unconvinced given that ByteDance will still hold majority 80% ownership. TikTok Global begs to differ, explaining that two-fifths of ByteDance is owned by American investors, making TikTok Global a US-owned company.
“While we strongly disagree with the implications of TikTok as a national security threat, we nonetheless understand the concerns.”Vanessa Pappas, Interim Head, TikTok
Experts like Chris Kelly who is Facebook’s former chief privacy officer shares these concerns asserting that there is substantial evidence of the Chinese state’s influence in ByteDance. In a recent interview, Kelly had claimed that US users could still be at risk despite the data being secured with Oracle, because interactions between the companies on issues like “algorithmic operations” could easily expand to personal data of users.
Moreover, if ByteDance retains four-fifth of TikTok, the deal is not expected to be deemed satisfactory by the Committee on Foreign Investment in the United States (CFIUS) – a panel US Treasury-led panel to examine American business deals having overseas links. Similarly, with ByteDance still the majority owner, the deal doesn’t abide an executive order that Trump signed in August that required ByteDance to divest from TikTok’s US operations in entirety by November 12.
So with security concerns still looming large, the blessing to ByteDance’s deal with Oracle and Walmart, which makes him settle for much less than what Trump initially demanded from the TikTok owner, raises more questions than it answers. And forces spotlight on his relationship with one of the stakeholders in Oracle.
Oracle – Trump’s favorite tech giant
The top bosses at Oracle are well-known Trump allies. Oracle’s founder and Executive Chairman, billionaire Larry Ellison is part of the minority group of Trump supporters in Silicon Valley. Ellison hosted a fundraiser at his California estate for President Trump in February 2020. Likewise, Oracle’s CEO Safra Catz was part of President Trump’s transition team in 2016.
“We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world.”Oracle CEO Safra Catz on the TikTok Deal
Furthermore, Oracle, as part of TikTok Global, is reportedly developing an AI-driven educational program for children which will include history among other subjects. This looks aligned with President Trump’s recent History Project plan to create a commission promoting “patriotic education”, which he believes is necessary to counter how racism and American history is taught to American children in classrooms.
Oracle and Walmart stated that the TikTok Global deal will add $5 billion to the US Treasury as taxes. The new entity is also expected to bring over 25,000 new jobs, as per the companies involved.